Stocks See Support as US Core CPI Eases

The S&P 500 Index ($SPX) (SPY) today is up +0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.15%.  June E-mini S&P futures (ESM25) are up +0.07%, and June E-mini Nasdaq futures (NQM25) are up +0.09%. 

Stock indexes are moving higher today, with the S&P 500 and Nasdaq 100 climbing to 3-1/2 month highs and the Dow Jones industrials posting a 3-month high.  Stocks are supported today by falling bond yields and a weaker-than-expected US May core CPI report, which eased inflation concerns.  The 10-year T-note yield is down -4 bp to 4.43%.

Stock index futures initially moved lower in overnight trading due to a lack of concrete details from the now-completed trade talks between the US and China.  After nearly 20 hours of negotiations in London, US officials said both sides had established a framework to revive the flow of sensitive goods between the two countries, although the plan still requires approval from Presidents Trump and Xi Jinping. 

US MBA mortgage applications rose +12.5% in the week ended June 6, with the purchase mortgage sub-index up +10.3% and the refinancing sub-index up +15.6%.  The average 30-year fixed rate mortgage rose +1 bp to 6.93% from 6.92% in the prior week. 

US May CPI rose +2.4% y/y, right on expectations.  May CPI ex-food and energy rose +2.8% y/y, unchanged from April and a smaller increase than expectations of +2.9% y/y.

The markets this week will focus on any fresh tariff news and the US-China trade negotiations.  On Thursday, weekly initial unemployment claims are expected to fall -6,000 to 241,000.  Also, the May final-demand PPI is expected to increase to +2.6% y/y from +2.4% y/y in April, while May PPI ex-food and energy is expected to remain unchanged from April at +3.1% y/y.  On Friday, the preliminary June University of Michigan US consumer sentiment index is expected to climb +1.3 to 53.5. 

The markets are discounting the chances at 0% for a -25 bp rate cut at the next FOMC meeting on June 17-18.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.09%.  China's Shanghai Composite rose to a 4-week high and closed up +0.52%.  Japan's Nikkei Stock 225 climbed to a 3-1/2 month high and closed up +0.55%.

Interest Rates

September 10-year T-notes (ZNU25) today are up +9 ticks.  The 10-year T-note yield is down -3.2 bp to 4.438%.  Sep T-notes today recovered from overnight losses and moved higher after the US May core CPI rose less than expected, a dovish factor for Fed policy.  T-notes also have support after the 10-year breakeven inflation expectations rate dropped to a 1-month low today of 2.275%.

T-notes today initially moved lower on negative carryover from weakness in European government bonds.  Also, supply pressures are weighing on T-notes ahead of the Treasury's $39 billion auction of 10-year T-notes later today. 

European government bond yields today are moving higher.  The 10-year German bund yield is up +0.7 bp to 2.530%. The 10-year UK gilt yield is up +1.8 bp to 4.560%.

The ECB's wage tracker predicts Q4 2025 wage growth in the Eurozone rising +1.7% y/y, above expectations of +1.6% y/y but well below the +5.4% y/y in Q4 2024.

Swaps are discounting the chances at 13% for a -25 bp rate cut by the ECB at the July 24 policy meeting.

US Stock Movers

The strength of chip stocks is providing support to the broader market.  Micron Technology (MU), Marvell Technology (MRVL), ARM Holdings Plc (ARM), Microchip Technology (MCHP), and Broadcom (AVGO) are up more than +1%.  Also, ASML Holding NV (ASML) is up +0.88%, and KLA Corp (KLAC) is up +0.71%.

Talen Energy (TLN) is up more than +3% after expanding its existing nuclear pact with Amazon.com to provide 1,920 MW of power to Amazon's data centers through 2042. 

Starbucks (SBUX) is up more than +2% after CEO Niccol told the Financial Times that a possible sale of a stake in its China business has drawn "a lot of interest."

Urban Outfitters (URBN) is up more than +1% after Baird upgraded the stock to outperform from neutral with a price target of $90. 

JM Smucker (SJM) is up more than +1% after Jeffries upgraded the stock to buy from hold with a price target of $115.

Lockheed Martin (LMT) is down more than -6% to lead losers in the S&P 500 and defense stocks lower after the US Air Force cut in half its request to Congress for F-35 aircraft.  Also, Huntington Ingalls Industries (HII) and Northrop Grumman (NOC) are down -2%, and General Dynamics (GD) and L3Harris Technologies (LHX) are down more than -1%. 

US steelmakers are sliding today after the US and Mexico closed in on a deal to remove tariffs on some steel imports, boosting speculation that other countries could also receive concessions.  As a result, Cleveland-Cliffs (CLF) is down more than -7%, Nucor (NUE) is down -5%, and Steel Dynamics (STLD) and Commercial Metals (CMC) are down more than -3%. 

American Superconductor Corp (AMSC) is down more than -17% after selling an underwritten public offering of common stock overnight between $28 and $29 a share, well below Tuesday's closing price of $34.35. 

Chewy (CHWY) is down more than -11% after reporting a Q1 gross margin of 29.6%, below the consensus of 29.9%. 

Gitlab (GTLB) is down more than -10% after forecasting Q2 revenue of $226 million-$227 million, below the consensus of $227.1 million.

Etsy (ETSY) is down more than -1% after announcing it intends to offer $650 million convertible senior notes due 2030 in a private placement to qualified institutional buyers.

Earnings Reports (6/11/2025)

J Jill Inc (JILL), Lifezone Metals Ltd (LZM), Oracle Corp (ORCL), Oxford Industries Inc (OXM), PACS Group Inc (PACS), Smith-Midland Corp (SMID), Vera Bradley Inc (VRA), Victoria's Secret & Co (VSCO).